Lack of anchor hurts Henderson shopping center

Grace Leong

Friday, May 17, 2002 | 10:53 a.m.

The owner of a new Henderson shopping center is suing Smith's Food & Drug Centers Inc., saying it's having trouble finding tenants because Smith's backed out of a deal to build an anchor store there.

Stephanie-Cardona LLC, which owns Foothills Plaza, an 18-acre shopping center at the northwest corner of Stephanie Street and Horizon Ridge Parkway, sued Smith's in Clark County District Court this week.

Stephanie-Cardona said it incurred "substantial costs associated with the financing and construction" of the 150,000-square-foot shopping center because it was allegedly misled by Smith's "words and conduct" into believing it would complete construction of a 66,000-square-foot anchor grocery store by the shopping center's grand opening on Nov. 8, 2000.

"We ceased negotiations with Vons and Albertson's, other potential partners, after we reached a joint development agreement with Smith's in September 1999. As part of that agreement, Smith's bought 6 acres of the 18-acre parcel to build a grocery store," said Nathan Costello, Stephanie-Cardona's attorney.

"We got a $12 million construction loan from Bank of America to build the stores and standalone spaces, utilities, traffic lights and perform grading. We participated in months of meetings. Smith's drew its own plans for the store's construction and these plans were approved by the city of Henderson," he said.

"We were two-thirds finished on the project when Smith's said in November 2000 they weren't going to be there," he said.

The Foothills shopping center, which is fully built except for the grocery store and four other standalone spaces, now has seven tenants: Timbers Gaming & Pub, Foothills Cleaners, King Buffet, Mail Boxes Etc., State Farm Insurance, Image Tan Centre and a Jack-in-the-Box restaurant.

But Costello said Smith's alleged failure to fulfil its agreement has had a "tremendous deleterious effect on leasing."

"We lost about a dozen potential tenants who signed leases and then backed out. We had another body of tenants planning to go in but then refused to finalize their leases after they found out Smith's wasn't there," he said.

"Grocery stores usually bring the highest volume of foot and vehicle traffic a week. Smaller businesses tend to prefer as first choice a grocery anchor tenant," he said.

Costello said his client wasn't successful in trying to find a replacement grocery store tenant. "Vons and Albertson's aren't viable tenants now. Albertson's is already across the street. Vons said it wasn't going to be there. The nearest Raley's is (nearby) at Valle Verde and I-215."

Marsha Gilford, Smith's spokeswoman, declined to specify reasons behind Smith's decision to not build a store at Foothills Plaza.

"Competitive factors in the area forced us to reevaluate building at this time," she said. "Our agreement clearly states that Smith's is under no obligation to construct or open a store and the developer can buy the land back at the same terms. We're entertaining the idea of selling the land at this time."

"We believe the suit to be totally unfounded according to the terms of our contract," she said.

But Costello disagreed. "We're not in the position to buy back the land. That's another $3 million. The project and its owners are already seriously damaged by Smith's."

"We're continuing to market to tenants that don't rely as much on a grocery anchor store, But we now have to give substantial rental concessions to attract potential tenants."